Acct. 201
a 90-day note is issued on April 20 has a maturity date of
July 19
a record of the increases and decreases in a specific asset, liability, equity, revenue, or expense is a
account
the length of time covered by a set of periodic financial statements is referred to as the
accounting period
an account used to record the owner's investments in the business is called
common stock
the person who signs a note receivable and promises to pay the principal and interest is the
maker
the broad principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses is the
matching principle
beginning inventory plus net cost of purchases is
merchandise available for sale
the 12-month period that ends when the company's activities are at their lowest point is called the
natural business year
a company's cost of goods sold was 4,000. Determine net purchases and ending inventory given goods available for sale were 11,000 and beginning inventory was 5,000
net purchases 6,000. ending inventory 7,000
Wisconsin rentals purchased office supplies on credit. The general journal entry made by Wisconsin rentals will include
credit to accounts payable
management services, inc. provides services to clients. on may 1, a client prepaid management services 60,000 for 6-months contract in advance. management services general journal entry to record this transaction will include a
credit to unearned management fees for 60,000
rocky industries received its telephone bill in the amount of 300 and immediately paid it. Rocky's general journal entry to record this transaction will a
debit to telephone expense for 300
a credit entry
decreases asset and expense accounts and increases liability, common stock and revenue accounts
the accounts receivable turnover is calculated by
dividing net sales by average accounts receivable
A merchandising company
earns net income by buying and selling merchandise
if the credit balance of the allowance for doubtful accounts account exceeds the amount of a bad debit being written of, the entry to record the write-off against the allowance account results in
no effect on the expenses of the current period
a written promise to pay a definite sum of money on a specific future date is
note payable
the operating cycle for a merchandiser that sells only for cash moves from
purchases of merchandise to inventory to cash sales
the account used to record the transfers of assets from a business to its stockholders is
the retained earnings account
the matching principle requires
the use of the allowance method of accounting for bad debts
Broad principle that requires identifying the activities of a business with specific time periods such as months, quarters, or years is the
time period principle
the inventory valuation method that tends to smooth out erratic changes in costs
weighted average
western company has an annual reporting period that runs from July 1st through June 30th, based on this information which of the following is a true statement
western has adopted a fiscal year
goods in transit are included in a purchaser's inventory
when the purchaser is responsible for paying freight charges
the buyer who pays cash for an account receivable referred to as
factor
which inventory valuation method assigns a value to the inventory on a the balance sheet that approximates current cost and also mimics the actual flow of goods for most businesses
fifo
the accounting principle that requires financial statements to report all relevant information about the operations and financial condition of a company is called
full discloser
the general ledger of a business
is a collection of all accounts used in a company's information system
merchandise inventory
is a current asset
a promissory note received from a customer in exchange for an account receivable
is a note receivable for the recipient
a promissory note
is a written promise to pay a specific amount of money at a certain date
the acid- test ratio
is also called the quick ratio
the maturity date of a note receivable
is the day the note is due to pay
cost of a goods sold
is the term used for the cost of buying and preparing merchandise for sale
sales invoice
is used by sellers for recording purposes
which of the following identifies the proper order of the accounting cycle
journalize, post, adjusted trial balance
a collection of all accounts used by a business is called a
ledger
source documents include all of the following except: sales tickets, ledgers, checks, purchase orders, bank statements
ledgers
unearned revenues are
liabilities created when a customer pays in advance for products or services before the revenue is earned
during a period of steadily rising costs, the inventory valuation method that yields the lowest reported net income
lifo
the inventory valuation method that results in the lowest taxable income in a period of inflation
lifo
the quality of receivables refers to
the likelihood of collection without loss
the current period's ending inventory is
the next period's beginning inventory
a company had sales of 375,000 and its gross profit was 157,500. its cost of goods sold equal
217,500
a company recieves a 10%, 90 day note for 1,500. the total interest due upon the maturity date is
37.50
a company had sales of 695,000 and its cost of goods sold of 278,000. its gross margin equals
417,000
the interest accrued on 3,600 at 7% for 60 days is
42
which of the following list of events properly reflects the early steps taken in the accounting process?
Analyze each transaction, record relevant transaction, post journal information to ledger accounts, prepare and analyze the trail balance
a debit is used to record
a decrease in the balance of retained earnings
a ledger is
a record containing increases and decreases in a specific asset, liability, equity, revenue, or expense item
adjusting entries
affect both income statement and balance sheet accounts
merchandise inventory inclludes
all goods owned by a company and held for sale
various types of documents and other papers that companies use when they conduct their business: are called source documents, can include sales tickets, are the source of information for recording accounting entries, can be in electronic form
all of the above
The accounting process begins with
analysis of business transactions and events
goods on consignment
are goods shipped by the owner to the consignee who sells the goods for the owner
damaged and obsolete goods
are included in inventory at their net realizable value
physical inventory counts
are necessary to measure and adjust for inventory shrinkage
source documents
are the sources of accounting information
prepaid expenses are
assets that represent prepayments of future expenses
the system of preparing financial statements based on the recognizing revenues when the cash is received and reporting expenses when the cash is paid is called
cash basis accounting
the quick assets are defined as
cash, short-term investments and current receivables
a list of all accounts used by a company and the identification number assigned to each account is a
chart of accounts
the main purpose of adjusting entries is to
record internal transactions and events
the consistency principle
requires a company to consistently use the same accounting method of inventory valuation unless a change will improve financial reporting
the full disclosure principle
requires that when a change in inventory valuation method is made, the notes to the financial statements report the type of change, why it was made and its effect on net income
the accounting principle that requires a revenue to be reported when earned is the
revenue recognition principle
a company had expenses other than cost of goods sold of 51,000. determine sales and gross profit given cost of goods sold was 25,000 and net income was 60,000
sales 136,000, Gross profit 111,000
a company had expenses other than cost of goods sold of 250,000. Determine sales and gross profit given cost of goods sold was 100,000 and net income was 150,000
sales 500,000. Gross profit 400,000
a company had expenses other than cost of goods sold of 175,000. Determine sales and gross profit given cost of goods sold was 622,000 and net loss was 41,000
sales 756,000. Gross profit 134,000
of the following accounts, the one that normally has a credit balance
sales salaries payable
For what reason do most sellers require customers to have their receipts in order to exchange or return purchase items
sellers wish to ensure that the sale in question was rung up on the register in the first place
the materiality principle
states that an amount can be ignored if its effect on financial statements is unimportant to the user's business decisions
interim financial statements refer to financial reports
that cover less than one year, usually spanning one, three or six-month periods
double entry accounting is an accounting system
that records the effects of transaction and other events in at least two accounts with equal debits and credits
the account balance
the difference between the total debits and total credits for an account including the beginning balance